Blockchain Watch: HSBC trade transaction, CARICOM launches nodes

HSBC has carried out a blockchain-based trade transaction to process a shipment of soybeans from Argentina to Malaysia, made by US conglomerate Cargill in collaboration with ING Bank NV, reflecting the emergent use of the industry-transforming technology, moving it from hype to reality.

The transaction is one of the first to invoke blockchain technology in an international trade operation; Spain's BBVA ran a pilot operation utilizing Wave's distributed ledger technology (DLT) on a blockchain platform in November for an trade operation between Mexico and Spain.

In a statement, HSBC said the transaction, made through a letter of credit, demonstrated the commercial and operational viability of blockchain DLT technology. Carried out fully within a 24-hour time frame, the deal also shows the considerable time advantage provided by the system over traditional processes.

"This means that financial business transactions can be simpler, easier, more transparent and safer for businesses. The need to review physical documents becomes unnecessary because all the parts are linked in the platform and the updates are instantaneous. This means faster access for companies to liquidity," said Vivek Ramachandran, HSBC's global head of innovation and growth for commercial banking. "This is an inflection point for how trade is conducted."

The transaction was carried out on R3's Corda DLT platform and involved a shipment of soybeans from Argentina (through the commercial arm of Cargill in Geneva) to Malaysia through the subsidiary of Cargill in Singapore, acting as buyer. HSBC issued a letter of credit to ING through a platform based on DLT. The two banks, HSBC as the issuer, and ING as the beneficiary's bank, acted on behalf of the Cargill companies.

Caribbean blockchain nodes launched

In an effort to build digital payment and digital financial infrastructures for international trade, a new platform known as CariNet - the Caribbean Digital Finance and Free Trade System - has been officially launched, a blockchain network devised to facilitate transactions between the 15 CARICOM member nations.

CARICOM's 15 full members include: Antigua and Barbuda; Barbados; Belize; Guyana; Trinidad and Tobago; Dominica; Grenada; Saint Kitts and Nevis; Saint Lucia, Saint Vincent and the Grenadines; Suriname; Jamaica; Montserrat; Haiti; and the Bahamas.

"To meet the security demand of digital payment and financial systems, the CariNet Main Net plans to introduce national nodes to supervise the whole blockchain network in order to develop in a credible and orderly direction," read the announcement. "The national node supervision mechanism is not only of milestone significance for the development of the blockchain industry but also a great progress to push blockchain technology into the practical application stage."

The 15 national nodes will be expected to monitor all transactions that occur in the clearing system and receive real-time transparent transaction data to avoid the use of the blockchain digital payment systems for illegal transactions.

"Blockchain technology was considered to be the cornerstone of the next-generation value Internet as it entered the public eyes. But the brutal growth of the market also spawned a lot of negative effects, such as Bitcoin utilization in the black market, money laundering, terrorism and other crimes," continued the statement. "It has become the consensus of all parties to introduce the supervision mechanism to guide the development of blockchain technology."

The first phase of implementation for CariNet would be to establish digital payment infrastructures between CARICOM nations, including mobile terminal payment software and ATMs, as well as address the lack of local electronic payment systems.